Companies in the midst of digitizing their procurement processes have another incentive to push forward. According to a new report from The Hackett Group, procurement digitization can support employee retention.
In its new report, “Raising the World-Class Bar in Procurement Through Digital Transformation,” The Hackett Group explored how “world-class” procurement players — organizations that have implemented a range of digital tools within the procurement function — experience an array of benefits compared to the average firm.
That includes cost savings and improved ROI, The Hackett Group researchers noted. But another benefit is reduced employee turnover: best-of-class companies analyzed in the report experienced one-third lower staff turnover compared to average companies.
“There is a tremendous opportunity for procurement organizations to apply digital technologies — including cloud-based infrastructure and applications, business analytics, and more — to transform their service delivery model,” said Chris Sawchuk, The Hackett Group principal and Global Procurement Advisory practice leader, in a statement announcing the report on Monday (Aug. 21). “It can make them faster, cheaper, smarter, much more responsive to their customers and, quite simply, a more valuable partner to the business.”
Analysts pointed to a list of six key “digital accelerators” that can promote enhancements to the procurement function, but according to Robert Derocher of The Hackett Group’s Strategy and Operations Practice, organizations must be strategic in their adoption of technology, and not assume that efforts to modernize can cease.
“It’s important to understand that while digital technology is a powerful new platform, on its own it will not deliver the full performance improvement potential,” Derocher said. “New technologies may lead the way, but they must fit within a larger strategy, one based on a well-designed service delivery model that includes rationalization of ERPs and other legacy technologies along with redesign of processes, information, talent and organization.”